Wednesday, 29 October 2014

Companies Act 1956: Nature of Shares and debentures: Section 82

According to sec 82 shares are issue by the companies out of the
ownership on the other hand the debentures are issue out of the loan capital.

Shares have the voting rights whereas debenture do not have voting
rights.

Provisions regarding Share Capital:

Section 83 Numbering of shares:

Every company must give a number to
its shares, hence each share has its number.

Section 84 Share Certificate:

Each company must issue shares in the
form of share certificates hence it is compulsory for the company to make share
certificate for each shareholder.

Section 85 Types of shares

Companies can issue two types of
shares.

Equity shares

Preference Shares

Preference Shares: Section 84,
and 85:

The preference shares are the
shares which have the preferential right over the company in respect of
dividend and redemption.

The preference shares of a
company are different from the equity shares and the preference share holders
get a fixed rate of dividend.

Equity shares:

Equity Shares are the shares
which are not having any preferential right over the payment of dividend or
redemption money.

Section 86 Only two types:

Companies cannot issue more than two
types of shares which are equity shares or preference shares.

Section 87 Voting Power:

Every equity share holder shall have
voting power however preference shareholders don’t have voting power. The
voting power of the equity shareholders is always in proportion to the number
of shares held by the shareholders’, hence the voting power will be more if one
has more shares.

Voting power is not available if the
shareholder has not paid call on shares so if there are calls in arrears then
the share holders will not have any voting right in the meeting.

Section
91 Call on shares Uniform basis:

Every company making calls on shares
must make it on uniform basis, if a sum is demanded as a call then it should be
same for all the shareholders.

Section 92 Call in advance:

If the shareholders of a company pay
some advance call then the company can accept that and apply the same in future
calls, however if the call is not accepted by the company we cannot for the
same.

Section 93 Dividend on paid up value:

Every company declaring dividend must
pay only upon the paid up value, so it is not paid on face value or market
value.